Student loan debt has become a pressing issue in the United States, with millions of students struggling to repay their loans after graduating from college or university. As of 2021, the total amount of student loan debt in the U.S. is over $1.7 trillion, making it the second-largest source of consumer debt in the country.
As a result, student loan forgiveness programs have become a popular topic among policymakers, academics, and students themselves.
In this article, we will explore the different types of student loan forgiveness programs available, their eligibility requirements, and how they can benefit students.
What are student loan forgiveness programs?
Student loan forgiveness programs are designed to help borrowers pay off their student loan debt by forgiving part or all of their outstanding balance. These programs are offered by the government, non-profit organizations, and some employers.
There are different types of student loan forgiveness programs, each with its own eligibility requirements, terms, and conditions. Some programs forgive a portion of the borrower’s debt after a certain number of payments, while others require the borrower to meet specific criteria, such as working in a particular field or location.
Types of student loan forgiveness programs
Public Service Loan Forgiveness (PSLF)
The Public Service Loan Forgiveness program is a federal program that forgives the remaining balance on Direct Loans after the borrower has made 120 qualifying monthly payments under a repayment plan that qualifies you while working full-time for a qualifying employer. Qualifying employers include government organizations, non-profit organizations, and some private companies that provide public services. This program was designed to encourage borrowers to work in public service and reward them for their service. To be eligible for the PSLF program, the borrower must have made all 120 qualifying payments while working for a qualifying employer.
Teacher Loan Forgiveness Program
The Teacher Loan Forgiveness Program is a federal program that forgives up to $17,500 of a borrower’s Direct or FFEL Loans after the borrower has worked full-time for five complete academic years in a school or educational service agency that has low-income.
To be eligible for this program, the borrower must be a highly qualified teacher who has not previously received a loan forgiveness under this program or the predecessor Teacher Loan Forgiveness Program.
Perkins Loan Cancellation
The Perkins Loan Cancellation program is a federal program that forgives part or all of a borrower’s Perkins Loan debt if they work in certain public service jobs. Eligible professions include teachers, nurses, law enforcement officers, and firefighters, among others.
To be eligible for this program, the borrower must have completed at least one year of qualifying service and meet other requirements specific to their profession.
Income-Driven Repayment Plan Forgiveness
The Income-Driven Repayment Plan Forgiveness program is a federal program that forgives the remaining balance on a borrower’s Direct Loans after they have made 20 or 25 years of qualifying payments, depending on the plan.
Qualifying payment plans include Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE). The borrower must also meet certain other eligibility requirements, including demonstrating a partial financial hardship.
State-Sponsored Loan Forgiveness Programs
Apart from federal programs, some states also offer their own type of student loan forgiveness programs. These programs are designed to encourage borrowers to work in certain fields or locations that are experiencing a shortage of qualified workers.
Eligible professions include healthcare, education, and social work, among others. To be eligible for these programs, the borrower must meet the specific criteria set by each state program.
Each student loan forgiveness program has its own eligibility requirements, and borrowers must meet all of them to qualify for forgiveness. Generally, these requirements include:
Having a certain type of loan: Most forgiveness programs